Kirk Vartan is feeling the pinch of rising health insurance costs. He pays over $2,000 each month for a high-deductible plan from Blue Shield through Covered California, the state’s health insurance marketplace. He opted for this plan to keep his wife’s doctor, even though cheaper options were available. “It’s for the two of us, and we’re not sick,” Vartan said, expressing frustration over the high premiums.
Vartan, who manages A Slice of New York pizza shops in San Jose and Sunnyvale, is not alone. Many Californians are grappling with soaring health insurance premiums, which have nearly doubled in the last 15 years. In 2008, the average monthly premium for families with employer-provided coverage was just over $1,000. By 2023, it has climbed to almost $2,000, according to a recent analysis by KFF Health News. This increase far outpaces the rate of inflation, leaving many workers to shoulder a larger share of the costs.
The issue extends beyond California. Nationwide, health insurance premiums for families with employer coverage have risen at a similar rate. In 2024, these costs are expected to continue climbing rapidly. Small-business groups warn that without continued federal subsidies, those without employer-sponsored insurance could face even steeper prices on the individual market.
Covered California has seen premiums increase by about 25% since 2022, which is roughly double the inflation rate. Fortunately, around 90% of enrollees receive state and federal subsidies, helping many families to afford their coverage.
The rising premiums are also affecting government workers and taxpayers. Premiums for CalPERS, which covers over 1.5 million public employees and their families, have jumped about 31% since 2022. Public employers share the burden of these costs with employees, making it harder for families to manage their health care expenses.
Miranda Dietz, a researcher at the University of California-Berkeley Labor Center, noted that insurance premiums have been rising faster than wages for the past 20 years. She attributes much of this increase to rising hospital costs, which have surged nearly 88% since 2009. The high costs of running the healthcare system in the U.S. also contribute to these premium hikes. While insurance companies remain profitable, they must adhere to federal rules requiring them to spend a minimum percentage of premiums on medical care.
For many families, these rising costs mean they are delaying or skipping necessary medical care. The average annual cost of family health insurance in California reached about $24,000 in 2023, with employers covering roughly two-thirds of that cost. Workers are now paying about $650 a month on average, a figure that has increased more rapidly in California than in other states.
As small businesses struggle to provide affordable health insurance, many employees are turning to Covered California. The percentage of small businesses offering health insurance has dropped significantly in recent decades, making it harder for employees to find coverage through their employers. Vartan’s pizza shop, which employs about 25 people, operates as a worker cooperative and lacks the negotiating power to secure better insurance deals.
To combat these rising costs, California is implementing measures aimed at controlling healthcare spending. The state has set up the Office of Health Care Affordability, which aims to limit annual spending growth to 3.5% over the next five years. If healthcare organizations fail to meet these targets, they could face penalties.
While these initiatives may slow the rate of increase, experts warn that they may not make healthcare truly affordable. As Dietz pointed out, even if costs rise more slowly, it doesn’t mean that healthcare becomes accessible for everyone. The ongoing struggle with rising premiums continues to be a significant concern for many Californians.